Introducing a Dollar Shave Club-style subscription model to other brands in the Unilever portfolio is “undoubtedly” in the pipeline, according the company’s chief executive Paul Polman who addressed analysts for the first time since it announced the $1bn acquisition of the razor delivery service.
Polman described the brand as “innovative and disruptive” with a “cult-like” following of some 3.2 million members who are now buying into products beyond razors, but also body wash and skin cream, that will in turn take Unilever further into male grooming.
But, his enthusiasm for it shed light on some of the bigger reasons behind the acquisition. This loyalty among millennials the Dollar Shave Club has managed to foster is something it is desperately looking to emulate across other categories.
It admits that trying to do that internally by “re-educating” would have either been impossible or “taken so long the market would have moved on”, perhaps a dig at rival P&G which yesterday announced it was cautiously “trialling” subscription models for some of its brands.
In the case of Unilever, buying in that direct-to-consumer knowledge and expertise shows that it’s looking to move quickly. Indeed, it’s already earmarked ‘Prestige Brands’ – such as Murad, Ren and Dermalogica – as well as brands in the Tea sector as potentially ripe for disruption with a subscription model of the Dollar Shave Club-ilk
Polman’s comments came during an analysts call today (21 July) outlining its performance in the first half of the year. There has been “consistent, competitive, profitable and responsible growth” with underlying sales up 4.7 per cent, with volume up 2.2 per cent.
“We have been preparing ourselves for tougher market conditions in 2016 and do not see any sign of an improving global economy,” he said.
“Against this backdrop we continue to drive agility and cost discipline, implementing the key initiatives announced at the end of last year: net revenue management, zero based budgeting and ‘Connected 4 Growth’ which is the next stage in our organisational transformation.”
Amongst this has been the re-evaluation if its marketing, with driving “efficiencies” the focus. Some $1bn in savings have been made with Polman pointing to changes to its market research processes to be more digitally-led as a prime example of where the cost-cutting has come from.
Overall, brand marketing investment was down 50 basis points for the period, but the company emphasised that it had been up 50 basis points year before and so spend remains relatively consistent.
In this economic environment, it needs the “stronger brands to be stronger” and so is funneling the bulk of the investment in the direction of such brands. One beneficiary is Dove, which has continued to address wider global issues in its marketing (and as a result, build brand loyalty), and so grew by six per cent in the first half of the year.
"This consistency of performance, achieved during a period of high volatility and accelerating change, shows that our long-term focus is paying off. We are seeing the benefits from delivery against the four differentiated category strategies that continue to guide investment in our brands, our infrastructure and our people," added Polman.